The choice was made by a committee with representatives of the Lower Manhattan Development Corporation (LMDC), the Port Authority of New York and New Jersey, the governor and the mayor.

LMDC spokesman Matt Higgins said that the committee met for 45 minutes on Wednesday afternoon and unanimously decided on a plan. Redevelopment officials were due to announce the decision publicly today.

Both Governor George Pataki and Mayor Michael Bloomberg favoured the Libeskind plan, an important factor in the decision, according to a source close to the process.

LMDC Chairman John Whitehead telephoned Mr Libeskind with the news, the source said, telling the architect that his "vision has brought hope and inspiration to a city still recovering from a terrible tragedy."

Mr Libeskind said he had no comment on the announcement. But he told the LMDC chairman that being selected is "a life-changing experience," the source said.

The architect, whose firm is based in Berlin, has estimated the cost of building his design at $330m (£208m).

Nine proposals for redeveloping the site, where nearly 2,800 people died on September 11 2001, were unveiled on December 18 last year. The design competition was launched after an initial set of plans, released in July, was derided as boring and overstuffed with office space.

The two finalists each featured buildings surpassing Malaysia's 1,483-foot (445-meter) Petronas Twin Towers, the tallest in the world. The World Trade Centre towers stood 1,350ft feet (405 metres) tall. A small number of telecommunications towers would still be taller than the Libeskind spire.

After the two finalists were chosen, both teams of architects were asked to revise their designs to make them more easily realised. Mr Libeskind, whose original design called for a memorial 70ft feet (21 metres) below ground, reportedly changed that to 30ft, allowing for infrastructure and transportation underneath.

The source said that the plan chosen could also be slightly altered to accommodate victims' relatives, who told redevelopment officials they did not approve of plans to build parking areas at the base of the pit.

The parking areas would be for memorial visitors, not general public parking, but Mr Pataki has told planners to "find an accommodation" that the families would approve, the source said. Mr Libeskind, 57, has said he included the sunken space because he was inspired by the surrounding immense slurry walls that hold back the Hudson River - which he says are the most dramatic elements to survive the terrorist attack. He wanted visitors to be able to visit the site in a quiet, meditative space.

As presented in December, the design called for a museum in the sunken space, near where he envisioned a memorial to be placed. A separate competition for a memorial design will begin this spring.

The 1,776ft spire, next to a cluster of office buildings, was designed to house a garden all the way to its top, and not office space, because "gardens are a constant affirmation of life", Libeskind said when he presented the plan.

Mr Libeskind was born in Poland in 1946 and became an American citizen in 1965. He studied music in Israel and in New York, but left the field to study architecture.

Although his firm is based in Berlin, he has significant ties to New York. He earned his degree in architecture at the Cooper Union for the Advancement of Science and Art in 1970.

"I arrived by ship to New York as a teenager, an immigrant, and like millions of others before me, my first sight was the Statue of Liberty and the amazing skyline of Manhattan," he said on his website. "I have never forgotten that sight or what it stands for."

Mr Libeskind is striking in appearance with thick-framed, wraparound glasses and a shock of silvery hair. He is noted for his iconoclastic work and museum designs.

His firm, Studio Libeskind of Berlin, won wide acclaim for the design of the Jewish Museum in Berlin. The firm also designed an extension to the Denver Art Museum; the Spiral Extension to the Victoria & Albert Museum in London; the Jewish Museum in San Francisco; the postgraduate student centre for the London Metropolitan University; and the extension to the Royal Ontario Museum in Toronto.

In 2001, he became the first architect awarded the Hiroshima Art Prize, given to an artist whose work promotes understanding and peace.